This post from Dave Alpert raises a larger issue running through our affordable housing policy, namely that it’s important to be careful that a policy designed to create incentives to build more affordable housing isn’t actually just restricting the supply of market-rate housing. At the margin, adding new market-rate housing units reduces the cost of housing, making housing more affordable. In other words, given a choice between a project with 20 affordable units and 20 market-rate ones or a project with 40 market-rate units the former is more desirable from an affordability standpoint. But the 40 market-rate units is better for affordability than is letting the site remain as a vacant lot or a very low-density use.
The best kind of incentives, meanwhile, do both. For example, you let developers build a taller building than the local zoning code would normally allow, but only if some of the additional square footage is devoted to affordable housing.
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